Andrea Tucker, Director of MortgageMe, has drawn up a list of the pros and cons of buying a property, building a house or renovating your existing house to help reduce your decision fatigue
As a new year dawns, it is a long-held custom to take stock of our lives and make positive changes. It is a time when resolutions are made, goals are set and things that make us unhappy are looked at critically and either fixed or discarded.
If your home is no longer suiting your needs, perhaps 2022 is the year to fix this. Depending on what is making you unhappy, you can choose to either sell up and buy a new house, build a new one from scratch, or stay put and renovate.
“Each choice comes with its own benefits and challenges. Ultimately your budget and lifestyle needs will be the deciding factors,” says Andrea Tucker, Director of MortgageMe.
Here are some points to help you decide.
*On average, the cost of buying a home is 20-30% cheaper than building one.
* Established properties are usually close to amenities such as schools, shopping areas, and restaurants, as well as major highways or public transport.
* Established homes usually have a pool and garden, which means you don’t have to spend money building these from scratch.
* Buying a home can be a relatively quick process, taking about three months to secure the home loan, pay the deposit and organise all the necessary documentation and have the property transferred into your name allowing you to move in.
* When buying a home, you have the option of looking for a good deal and comparing prices.
* An existing house may be an older building, which is unlikely to be energy efficient or suited to the advances in technology and home automation.
* You may need to renovate to get what exactly what you want, which can be expensive. Making it energy efficient also comes at a cost, which you should budget for upfront.
* The home may have a ‘lived-in’ feel, a turn-off for some.
* Some older properties are sold ‘as-is’ without a warranty, which means the responsibility is yours to check what you’re buying.
* You can build your dream home just the way you want it – choosing everything from the design and materials to the cabinets and flooring. And in doing so, you can watch as your vision is built, brick after brick.
* Building your own home adds sentimental value; there is something special about knowing you and your family will be the first to live in it.
* A brand new and up-to-date home will have fewer maintenance issues.
* Construction materials and building codes will be up to latest safety standards.
* A new home can incorporate all the latest building trends, including tech-friendliness and energy efficiency.
* There is less competition for buying a plot of land than for buying existing homes.
* You will save on transfer duties as there’s no transfer of property from one owner to another and avoid some of the legal processes involved in buying an existing home.
* Building is more expensive, but keep in mind that you may save money in the long run – on maintenance, renovations and transfer fees.
* Unless you have budget for a project manager, expect to do this yourself, and you’ll need to make time on a regular basis to ensure that the project is running smoothly and to plan.
* The building industry is notorious for delays, so you may need to rent a home while you wait for your home to be built, which can put a real dent in your finances.
* Inclement weather can cause pauses in construction, which can get frustrating.
* Building projects often run over budget and exceed cost expectations.
READ MORE: Funding a home renovation
* If there is space to renovate and you love your neighbourhood, you get to stay in an area you like in a new and improved home.
* A home you have lived in for a long time has sentimental value and renovating means staying.
* You can have complete creative control over the renovations.
* There are no transfer or bond cancellation fees, or other costs of moving.
* Renovating or adding on can increase your home’s value.
* You can often fund a renovation through the capital you’ve already paid off on your home, or it’s a relatively simple process to apply for additional funds on your home loan to fund a renovation.
* You will have to live in a construction site for a while or move out and rent another place, which will cost extra.
* There are often unforeseen expenses when renovating, as previously hidden problems are unveiled.
* You risk overcapitalising. Before renovating, find out the average property price in your area, and ensure that the renovation costs don’t exceed the average house price.
* Building contractors can be unreliable and often run over the agreed upon timeframe.
* Where alterations will affect your home’s structure, you will need to get a building inspector to sign off on the plans before any building takes place.
“The decision to build, buy or renovate is not an easy one, and will depend on your financial situation as well as your personal feelings about each option. It looks as though 2022 will continue to be relatively buyer-friendly, but not for too long as the housing market and economy slowly recover. Do your homework on the market, assess the costs involved in each choice consider drawing up your own pros and cons list,” advises Tucker.